The financial world is constantly changing. These changes are often triggered by financial policy changes. The financial policy changes are typically made by enacting legislation in the form of code, regulations, and/or rules. These changes often have a direct financial impact on households and businesses.
Today, the economic impact from a proposed financial policy change is not well understood and only approximated for aggregate impacts on a broad base population. Thus, the full impact on a particular household or business is not known. As a result, special interest groups often present arguments to persuade a household for or against the proposed policy change. These arguments cannot be refuted because the calculations on full financial impact on specific individuals, businesses, or households are not performed. Thus, speculation governs the decision of whether to support a proposed financial policy.
In an attempt to describe the impact of a change, computerized financial programs for electronically processing financial scenarios and making projections are used. Financial programs today handle the variability of changed inputs as well as the calculation of corresponding model outputs or scenario calculation outcomes.
However, for the reasons described above, these model outputs or scenario outcomes are generalized for an “average” or “median” household (or business) or an “assumed” household (or business) based on a “typical” criteria. For example, when a proposed piece of legislation affecting a financial policy is being debated, the proponents and opponents of the legislation are armed with model outputs and/or scenario calculation outcomes regarding the purported impact of legislation on the “average” or “typical” household (e.g., the tax bill will cost the average household $50/week, the tax cut will save each household with two children $250/year, etc.). This information may then be used as part of a publicity campaign to either elicit support for the proposal or attack the proposal. A specific household, business, or individual viewing this information is unsure of the specific impact the proposed financial policy change will have on their situation, which will ultimately influence their decision to support or oppose the proposal(s).